TMI Blog2011 (2) TMI 508X X X X Extracts X X X X X X X X Extracts X X X X ..... the first time, he was free to withdraw the claim before any assessment was made Since interest is a revenue receipt, therefore, it is held to be a business income and since the interest income has been included in the profit & loss account, the interest paid on borrowed funds is automatically set off against the interest income - the interest earned on deposits which has been held to be business income and which is reflected in the profit & loss account, gets set off against the interest paid which debited to the profit & loss account. - ITA No. 400 of 2005 - - - Dated:- 25-2-2011 - MR. JUSTICE ADARSH KUMAR GOEL., MR. JUSTICE AJAY KUMAR MITTAL, JJ. Ms. Urvashi Dhugga, Senior Standing Counsel, for the appellant. Mr. Animes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act being 100% export oriented unit. The assessee filed revised return under Section 139(5) of the Act on 31.3.1998 by declaring the income at Rs.7,07,433/- after withdrawing the exemption claimed u/s 10B of the Act as per provisions of Section 115JA of the Act. The case of the assessee was taken up for scrutiny by issuing notice under Section 143(2) on 30.6.1998 and its assessment was completed on 25.10.1999 at a total income of Rs.33,87,620/-.. The Assessing Officer held the interest income as taxable under the head other sources and the income earned on surplus funds after commencement of business also as income from other sources and accordingly taxed the entire interest income of Rs.33,99,620/- as income from other sources . Feeli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn. 7. On the other hand, learned counsel for the assessee has placed reliance upon the decisions of this Court in Beco Engineering Co. Ltd. Vs. Commissioner of Income-Tax, Rohtak (1984) 148 ITR 478 and Commissioner of Income Tax Vs. Friends Corporation (1989) 180 ITR 334 and submitted that the assessee was entitled to file the revised return under Section 139(5) of the Act and withdraw its claim under Section 10B of the Act. 8. We have given our thoughtful consideration to the respective submissions of learned counsel for the parties and do not find any merit in the submission made by the learned counsel for the revenue. 9. This Court in Beco Engineering Co. Ltd.'s case (supra) where the assessee had filed revised return with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim for exemption under section 10B of the I.T. Act, which had been claimed in the original return. There is no dispute that the original return under section 139(1) had been filed in time, therefore, the assessee was competent to file a revised return under section 139(5) of the I.T. Act. In the original return, the appellant had claimed exemption under section 10B of the I.T. Act. Later on the appellant realised that the market conditions were not conducive for export and he would not be able to fulfil the export obligations for eight years, therefore, a revised return was filed in which claim for exemption under section 10B was withdrawn and the assessee offered to be assessed under section 115JA and the tax was also paid accordingly. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is 100% export oriented unit and its income is exempt under section 10B of the I.T. Act. Subsequently the return was revised under section 139(5) of the I.T.Act withdrawing the claim for exemption under section 10B of the I.T.Act, which was followed by a letter dated 31.3.1998 wherein it was undertaken that the assessee will not avail any benefit under section 10B of the I.T.Act even in the subsequent years. In the circumstances, the Assessing Officer has erred in holding that the interest earnest represents income from other sources. Since interest is a revenue receipt, therefore, it is held to be a business income and since the interest income has been included in the profit loss account, the interest paid on borrowed funds is aut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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